A Great Example of How to Make Big Money with Credit Cards

A reader recently sent me his credit card points and bonus summary for 2011. It's a great example of how you can make a good amount of money using credit cards to get both bonuses and rewards. Here are his results:

New Cards, August 2011

• Wife--Chase Freedom, 20,000 points, no annual fee. -- $200 check received


• Husband--Citicard, 50,000 points, $500 gift certificates, however $125 annual fee. -- $375 net in Lowe’s cards


• Wife--Chase SWA, 50,000 points for $833 flights/$500 cash; $99 annual fee. -- $734 net in flights redeemed


• Husband-- Chase SWA, 50,000 points for $833 flights/$500 cash; $99 annual fee. -- $734 net in flights redeemed


• Husband—Chase Freedom, 30,000 points after spending $2500, no annual fee. -- $310.92 check received

New Cards, December 2011

• Wife—Citicard Thank You Premier Card, 50,000 points w/ $2500 in 3 mos. -- $500 check to be received


• Wife—Chase Sapphire, 50,000 points after spending $3000 in 3 mos. -- Pending ($500)

2011 Points Redeemed for Spending on Cards

• Wife’s SWA spending; 8,000 points redeemed for $100 gift cards/special deal -- $100.00 Amazon cards


• Husband’s Chase Sapphire spending/redemption in 2011; $29,836 on card. -- $298.36


• Husband’s Citicard spending; Around $11,000 so far, 10,000 points redeemed. -- $100 Barnes/Noble cards.   

Grand Total for 2011:     $3,852.28

He ended the summary with the following quote:

"The beauty of having spotless credit.  Bonuses/Redemption not taxable income, which is HUGE!"

Gotta love it!!! ;-)

If you're interested in making more money with credit cards either by getting large bonuses or simply using the cards, I keep lists of both the best cash back credit cards (for use) and best credit card bonuses.

FYI, I'll report my credit card rewards for the year once I get around to adding them all up.

Comments

[Matt]

Interesting but how much did they have to SPEND to get that $3852.28.

It looks way more than I would spend in a year what they spent in a month.

[Alex]

I get sick of reading all these posts about 'making money' on credit card rewards. I would imagine this person had to spend over $100,000 to earn those rewards. You will spend more than you otherwise would on a credit card, and this negates the so-called 'earnings'.

[Rich Uncle EL]

These people are getting great rewards, but I believe they had to spend 60 grand to get all those rewards. I do not see a benefit for anybody here. Maybe they are millionaires, lol. This would not relate to average people on a budget looking to reduce spending.

[MonkeyMonk]

I've got to say I find your hucksterish tone somewhat disappointing for a post of this type -- especially when combined with commission generating link to credit card offers. Is highlighting how to "MAKE BIG MONEY" by racking up credit card expenses really a good thing?

I've had this problem with this site before and I think it's probably time I went elsewhere.

[Brent]

AND if you click the Chase link on FMF to sign up for a shiny new card, you make even MORE money!

Lost respect for this site, each time I read an article I will be thinking its trying to set me up so that FMF can make some more cash.

[Josh]

If you need a new credit card, by all means sign up for one with a good bonus. Most of these examples are one-time bonuses for signing up not recurring annual bonuses.

As for me, I'll just stick with my current rewards card. I'm not going to jump through hoops every month or two and keep signing up for new card after new card.

[Josh]

Also to add I agree with the others, this site is turning into a credit card spam site. I used to enjoy the financial articles but those are fewer and farther between now.

[Nina]

The people who think you have to spend big money to get these rewards are wrong. I am on an extremely tight budget and spend pretty little (of course, that is relative, and I do have a large family so spend more than a small family). For example, to get the Southwest rewards stated in the article, all you needed to do was make one purchase. I did that by spending ~10.00 and got rewards to the tune of $531 on that card alone (=$600 gift cards minus $69 annual fee). Altogether for the year 2011, I earned $7360 in credit card signup bonuses and bank account signup bonuses. Keep in mind my salary is ~80K and I am the sole wage earner in my family, so that is a significant chunk of change which helps me balance my budget. Also keep in mind that the $7360 quoted above does not include (a) regular cash rebates which I earn on my monthly spending which is ~$1000/year and (b) miles earned which I have not yet used so do not have a cash value yet. In case you are wondering how much I had to spend to earn the $7360, it was a grand total of $10,520. I think most people spend that much in a year :)

[jim]

I think the post is fairly clear about how much money was earned from actual spending. THe vast majority of the money, about $3300, was from promotional deals from signing up for new cards. Only about $500 was from rewards from actual spending. So they didn't have to spend all that much to get the money. It looks like they had to spend about $8000 to get the $3300 in promo rewards.

For example you could get the Chase SWA (Southwest airlines) card 50,000 bonus points after your first purchase. That basically netted them $734 in free money twice. Thats over $1400 total without having to spend much at all. I'm not sure if Southwest is still offering the 50k points but you can get 25k points.

THe one question, I do have is : What did signing up for all these cards do to their credit scores?

[Alex]

@jim makes a good point. This undoubtedly would lower your credit score and potentially undo any 'big money' you earned due to higher interest rates. If you can earn significant money by spending relatively little I suppose that's good but seems like a strange way to try and earn money. I also agree with many of the other posts that this site has lost a good deal of credibility through the pushing of credit cards. FMF states that he gives all profits to charity, which is a great thing. However, there are those who might take this advice and get in over their heads with credit cards trying to make 'big money'.

[Amy]

This year, my husband did the Chase SW Airlines bonus point deal, the Citi Thank you bonus deal, I did the Chase Sapphire deal, and I parked $1500 in a new Chase checking account to get their bonus of $150. Dings on my credit score? Who cares?! We have a paid off car, home, and no debt at all. I love bonus offers and plan to apply for as many as I can.

[Traciatim]

Aren't credit card reward programs pretty much the exact opposite of a progressive tax system? The costs to the program are paid for by every consumer that shops at the store, but only a select few of usually well off people get rewards from it.

Is that really the type of system you want to be supporting?

[FMF]

All --

Sorry, I've been traveling the past couple days so I'm slower than average on the comments. A few from me:

1. I write about what I know and do. I use credit cards to get as many extra rewards as possible, so I write about them.

2. In the past month, I've posted over 100 pieces. Three (including this one and a reminder to register for the Chase Freedom bonus categories) have been about credit cards. Not excessive IMO.

"I used to enjoy the financial articles but those are fewer and farther between now."

Really? Those 97 other articles this past month are outweighed by three you don't like?

3. We've covered the impact that both getting a new card and closing a card have on your credit score. Answers: not much. Sources:

http://www.freemoneyfinance.com/2011/07/how-getting-a-new-credit-card-impacts-your-credit-score.html

http://www.freemoneyfinance.com/2011/12/how-much-closing-a-credit-card-impacts-your-credit-score.html

Note that this last one is almost identical to the commenter above who sees the small trade-off as worth the big reward.

4. Traciatim -- You're assuming a lot: 1) that I think a progressive tax system is the "best" system, 2) that a progressive tax system IS actually the best, 3) that the actions of one person really "support" a system, 4) that getting credit card rewards is any different than any other frequent buyer/purchaser program, etc. 5) that the system is unfair because some people can't participate (where it's true that some people choose NOT to participate.) and so on.

[crashdamage1957]

Funny sort of irony that i read this post moments after cashing in some Chase Freedom bonus points to get a $50 Lands End card for $40 in cash back. We use this card and two others, depending on the program offered, to pay our regular bills and for our grocery shopping, so its frugal money that we would spend anyway. My take on the article is that if you max pay your cards, as we do, buy only stuff that you really need, as we most usually do ( reasonable splurges only ;) might as well exploit the bonus program, as long as the effort does not exceed the result.

[Michael Goode]

In response to Traciatim, yes of course people who pay interest on credit cards and who don't game the system end up subsidizing the system. But taking advantage of the system, if it does anything, would encourage credit card companies to not offer such great sign-up bonuses because you are reducing their return on their sign-up bonus investment.

And as someone who has no need of consumer credit in the future, I think investing a little time into an easy few thousand dollars would be worth a small or large hit to my credit score.

[Luis]

It would have been better to express the rewards earned as a percent of rewards over expense. Whoever has the highest percent reflects the one who most maximizes the credit card strategy.

Since other have taken a stand, then I guess I will too. FMF has nothing to gain if he donates all proceeds to charity, I'm guessing the website grosses about 26k per year? Only way to know is if FMF makes his tax return public. Secondly, I fail to see how credit card reward system is unjust unless you are concluding that consumers are helpless to incur debt. Even then, the FMF website is there to teach people about personal finance and frequently about reversing debt and increasing your net worth. When you couple this message with ways to add an extra buck through credit cards, how can you conclude that that is disingenuous?

The system may not be the best but at least here you not only learn to avoid debt traps from credit card companies, but to also use it to your advantage, and anyone else's too.

[Steve]

Chase won't like 98% of people apply for 5 different credit cards in 6 months, let alone 1.

[Dealsseeker.blogspot.com]

I started signing up for credit cards for their sign up bonuses as well. I signed up for 9 credit cards between my husband and I on 1 day. Our credit scores took a small hit and came back up within a few months. I use automatic balance payments for each credit card so I never have to pay a fee. I don't spend any more than I used to, I just changed the way I spend. I now put EVERYTHING on my credit card as I used to pay cash for certain things. Things I used to purchase in-store, I now purchase online through their shopping portal.
For instance: In-store Sally Beauty Supply $300 per year spend would equal 300 points
The same online purchase with Chases Ultimate Rewards would get me 2100 points.
You just have to know how to use the system.
There are also some tricks as to how to spend on credit cards without actually spending money. For example when Staples has Free After Rebate items, you get your money back in the form of a check. etc..

This is time consuming, but I consider this a part time job of mine which can be very lucrative.

If this is not for you, then don't do it. But don't knock it!

[Angela Moss]

My husband I have been doing the same thing for some time now. At first I was very skeptical and worried about our credit scores. Once we reach our bonus on one card we switch to another. FICO only changes about 3 to 10 points. Never has put a huge ding in my credit. My score has been 780 or HIGHER for the last 5 or 6 years and in the last 3 I have opened AND closed about 4 or 5 cards. The biggest ding I ever had on my score was over 10 years ago for missing a payment. It is a little time consuming and of course you MUST pay off every month or you will never benefit from doing this. Free rewards....I'll take that any day. We averaged about 2500.00 last year, plus two airline tickets not used yet...yes tax free!